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Sam Markel launched Markel in 1930. Nowadays, with $1.98 Billion in gross written premiums and $267 Million yearly in net income, it’s one of the biggest companies in the property & casualty insurance industry. In the first quarter of 2011 Markel’s gross premium volume was $591 million and net income was $8.3 million.

Markel is investing its float in the stock market just like Warren Buffett’s Berkshire. Thomas Gayner has been the head of Markel Gayner Asset Management (Markel’s investment division) since 1990. He has been also chief investment officer of Markel since 2004. Gayner graduated from the University of Virginia Mcintire School of commerce in 1983.

Markel’s equity portfolio returned 11.1% annually between 2000 and 2009. One of the longest term investments of Markel is American Express (AXP). In the last 18 years, AXP has gained 838% vs. SPY’s gain of 312%.

According to 13F filings, Markel Gayner Asset Management Corp. has had at least 83 securities with a total value of $1.85 billion as of March 31st 2011. Gayner has been holding 22 of these stocks at least for the last three years. During the first quarter of 2011, he only replaced his three positions. He sold out Level 3 Communications (LVLT), Fortune Brands (FO) and AbitibiBowater, Inc (ABH). He bought Contango Oil & Gas (MCF), DST Systems Inc (DST) and Watsco Inc (WSO). Here is how Gayner’s top picks performed since the end of March 2011:

Stock

Value (Millions)

Return
Since Mar 31,2011

Carmax (KMX)

167.5

-5.92%

Berkshire Hathaway Class B (BRK-B)

132.0

-5.62%

Berkshire Hathaway, Inc. (BRK-A)

117.9

-5.56%

Fairfax Financial Holdings Ltd (FRFHF)

105.6

7.55%

Brookfield Asset Management (BAM)

100.4

1.61%

Diageo PLC (DEO)

95.4

8.88%

Disney (DIS)

64.0

-4.83%

Exxon Corporation (XOM)

60.9

-3.88%

Wal-Mart Stores (WMT)

53.9

7.41%

United Parcel Service (UPS)

53.5

-0.51%

Marriott International (MAR)

50.4

0.82%

General Electric (GE)

49.6

-2.29%

Union First Market Bankshares (UBSH)

39.4

10.64%

Home Depot (HD)

35.8

0.92%

RLI Corporation (RLI)

35.6

3.52%

W.P. Carey (WPC)

34.4

-0.76%

Johnson and Johnson (JNJ)

33.5

12.07%

General Dynamics (GD)

29.8

-3.39%

White Mountains (WTM)

29.7

-5.65%

Novo-Nordisk A/S (NVO)

28.8

-1.81%

Caterpillar Inc (CAT)

27.5

-7.94%

Fidelity National Financial (FNF)

24.7

10.83%

Automatic Data Processing (ADP)

24.0

4.62%

Sysco Corp (SYY)

22.2

16.86%

Leucadia National Corp (LUK)

22.1

-3.70%

NuStar GP Holdings (NSH)

21.3

-3.72%

Brown Forman Class A (BF-A)

19.3

4.46%

International Game Technology (IGT)

18.6

10.29%

American Express (AXP)

17.9

12.75%

Charles Schwab (SCHW)

17.3

-3.39%

Value Weighted Performance

1498.1

0.30%

SPY

N/A

0.44%

The above table shows the performance of Gayner’s 30 largest positions. Berkshire Hathaway was Gayner’s biggest investment at the end of March 2011. Berkshire Hathaway has lost 5.6% since then, underperforming the SPY by 6 percentage points. Bruce Berkowitz’s Fairholme had $500+ Million in Berkshire Hathaway at the end of December. Whitney Tilson argues that Berkshire’s stock price declined by a cumulative 15% since the beginning of 2008, despite the large increase in its intrinsic value. Tilson was expecting a 33% increase in Berkshire in 2011.

Gayner was holding $167.5 million in Carmax shares at the end of March 2011. Carmax has lost 5.9% since the end of March, underperforming the SPY’s 0.44% return. Roberto Mignone’s Bridger Managementalso had $30 million in Carmax shares at the end of December. The stock has a market cap of $6.8 billion and P/E ratio of 18.1.

Gayner had $106 million in FFH shares at the end of March. FFH has gained 7.6% since then, outperforming the SPY by 7.2 percentage points.

Brookfield Asset Management Inc. is a publicly owned asset management holding company. BAM recently traded at $33.49 and has a 1.6% dividend yield. Gayner had $100 million in BAM shares at the end of March. BAM has gained 1.6% since then, outperforming the SPY by 1.2 percentage points. The stock has a market cap of $21 billion and P/E ratio of 13.6. Bruce Berkowitz made a large investment in BAM during the first quarter.

SYY has had one of the best performances in Gayner’s portfolio since the end of March. He had $22.2 million in SYY shares at the end of March. SYY has gained 16.9% in the last seven weeks, beating the SPY by a large margin.

Diageo PLC is one of the most favorite stocks of Gayner. Gayner had $95.4 million in DEO shares at the end of March. DEO has gained 8.9% in the last seven weeks, beating the SPY by 8.4 percentage points. Osterweis Capital and Harris Associates had also large investments in DEO at the end of December.

CAT has had one of the worst performances in Gayner’s portfolio since the end of March. He had $27.5 million in CAT shares at the end of March. CAT has lost 7.9% in the last seven weeks, underperforming the SPY by 8.3 percentage points. CAT is also one of the Top 10 picks of Jim Cramer. Ken Fisher also had a huge $797 million position in CAT at the end of March. Jim Simons is another investor with a small CAT position.